AUD/USD Sideways Trading Continues – Brace for a Breakout!
Arslan Butt • 2 min read
The AUD/USD pair closed at 0.69629, after placing a high of 0.70009 and a low of 0.69497. Overall, the movement of the AUD/USD pair remained bearish throughout the day. The AUD/USD pair posted losses on Thursday, amid a risk-off market sentiment, due to increased concerns over the escalating number of coronavirus infections worldwide. The Aussie, which was perceived as risky, lost its traction in the safe-haven appeal, dragging the AUD/USD pair with it.
In the absence of any macroeconomic data from Australia, the AUD/USD pair followed the US dollar, China’s macro data, and US-China headlines. The US dollar was strong across the board after US Stocks turned lower, after the US Supreme Court ruled out that access to President Trump’s financial records cannot be blocked to prosecutors. The strong US dollar dragged the AUD/USD pair onto the low track on Thursday.
The US Dollar Index (DXY) that tracks the value of the greenback against other currencies, gained 0.13% on Thursday, reaching 96.80. The US reported a total of 3.1 million coronavirus cases as of July 9, while cases were increasing constantly in many states, including Florida, Texas and California. The record high in cases from Florida gave a push to the market’s risk-off mode, dragging the AUD/USD pair to the downside on Thursday.
On the other hand, at 06:30 GMT, the Annual Consumer Price Index from China came in line with expectations, at 2.5%. At 06:32 GMT, the Chinese Producer Price Index for June came in at -3.0%, against the expected -3.2%, providing support for the China-proxy Aussie. However, Aussie traders ignored the Chinese macroeconomic data and failed to reverse the losses in the AUD/USD pair.
From the American side, the Unemployment Claims for last week decreased to 1.314M from the forecast 1.375M, providing support for the US dollar, and this added to the losses in the AUD/USD currency pair. On the US-China front, the US Trump administration announced on Thursday that regulations with regard to blocking the US government from buying goods and services from any company that uses products from five Chinese companies, including Huawei, Hikvision and Dahua, will be finalized this week. This added in the ongoing tension between the US and China, weighing on the China-proxy Aussie, which ultimately dragged the AUD/USD pair down.
Daily Technical Levels
Pivot Point; 0.6972
On the technical side, the AUD/USD pair seems bullish, as the pair is heading north to test the 0.6992 level. This resistance level is extended by the triple top pattern, which can be seen on the 4-hour chart above. Today, we should look for bullish trades over the 0.6990 level and above. The pair could go after a further high level of 0.7030. Conversely, a selling bias could be seen below 0.6990, and up to 0.6930. Good luck!